Combined QVC-HSN Sales Slip 1%, to $1.87 Billion, in Second Quarter

This is an interesting turn of events: Qurate Retail is no longer breaking out separate financial figures, such as sales, for QVC and HSN. And the nets have a new honcho.

Qurate, parent of the two top home shopping networks, reported its second-quarter earnings Thursday. And it only broke out info for QxH, its goofy name for the umbrella company that runs and oversees the two channels. So we don’t know, at least from the 2Q press release, how QVC did versus HSN, just the combined data for QxH.

So QxH saw its revenue dip 1%, from $1.9 billion to $1.874 billion, in the second quarter compared with the year-ago quarter.

QxH reported sales declines in apparel and jewelry, which were partially offset by gains primarily in accessories and electronics, according to Qurate’s press release.

Operating income margin contracted and adjusted OIBDA margin was flat, reflecting gross margin pressure mainly from higher fulfillment (freight and warehouse) expense, which was partially offset by higher product margins, if you can make any sense of that.

QxH also incurred higher bad debt and marketing expense, according to its parent. These factors were offset by lower TV distribution commissions and customer service expense.

Lower TV distribution commissions were due in part to the accounting treatment for certain renewed HSN carriage agreements, as well as renegotiated rates at HSN and growth in off-air sales. Operating income included higher amortization expense related to HSN carriage agreements.

Beginning in the third quarter last year, HSN began renewing TV carriage agreements with several distributors — meaning cable and satellite companies — which provided multiyear upfront payments that are amortized over the life of the agreements, versus its previous convention of expensing quarterly payments as incurred. This accounting change has a positive impact on QxH’s adjusted OIBDA with a corresponding increase in QxH’s amortization expense, which is neutral to operating income each period and cash neutral over the life of the agreements.

That’s too much accounting mumbo-jumbo for us, but maybe you can make sense of it.

And here’s the exciting statement from Qurate President and CEO Mike George.

“We made good strategic and operational progress, evidenced by the sequential improvement in revenue and adjusted OIBDA margin at QxH and the double-digit, year-over-year adjusted OIBDA growth at QVC International in constant currency,” George said.

“These gains were partially offset by deterioration at Zulily. We are encouraged by the resiliency of our businesses and our ability to generate high levels of adjusted OIBDA and free cash flow in a dynamic and highly competitive environment. We resumed share buybacks, repurchasing nearly 12 million shares at an average price per share of $12.88 following our last earnings call. Going forward, we remain focused on building on the collective strengths of QVC and HSN, realizing synergies and stabilizing Zulily.”

Qurate also said that it had appointed Leslie Ferraro, a former Walt Disney Co. executive, as president, QxH, effective Sept. 16.

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15 Responses to “Combined QVC-HSN Sales Slip 1%, to $1.87 Billion, in Second Quarter”

  1. Leslie Says:

    Oh my horrible earnings again, the ship is sinking and what does Captain Mikey do. He reaches back into his playbook hires a skirt he can hide behind, will fire her in a couple of years and blame her. I think we have seen this picture before. Pathetic CEO who has no clue other than how to make money for himself. This is what’s wrong with America. Keep laying them off Mikey most of your employees know the fraud that you are.

    • Bob Says:

      Could not agree more Leslie. This company is never coming back. Their only chance is (1) get rid of Mike George, what makes anyone think he has the answer after he has failed year after year. (2) bring back the old guard who knew what the hell worked (3) unionize and stop being sheep for this valueless company who could care less about your personal situation and view you only as a body with a salary attached to it. (4) Get rid of one of worst HR departments ever, they are spineless and their jobs are just to look for ways to get you out – how do they sleep at night.

  2. Maggie Says:

    And they will continue to slip, as long as they treat their customers badly and don’t listen to their input.
    I’ve never cared for QVC, but was a big HSN shopper for over 20 years. They have changed so much I don’t like them anymore save for a few vendors. Now, when Evine isn’t selling Invicta, I watch them.
    If Qurate wants profits to climb, bring back the old HSN.

  3. Abigail Says:

    Not shocked, they use the same old tired 20 vendors and now switching them back and forth, I’ll continue to pass, but, will have one of then on when ironing or cleaning. I used to get stuff from HSN, but no more, most of the products are lame, and few now have free shipping, which was a big lure for me.

    • Bev Says:

      I agree. Also, I still like some of the vendors, but the quality of some of their merchandise has gone way down…and they wonder why returns have increased?!
      HSN used to be my favorite, and now I don’t care for it.

  4. Dee Says:

    The economy is not in good shape, with mega retailers such as Walmart and Target closing stores. So what is going to lure people to the mess that home shopping has become?
    There are few good deals, shipping costs are astronomical, the quality of the merchandise has plummeted, and there are fewer choices. HSN has been ruined by Qurate, and QVC is more boring than ever. If you can get past the Invicta shows, Evine is probably the best choice. I miss HSN from 20 years ago. And I know others do, too.
    I don’t think home shopping, in its current form, will withstand what looks to be a recession coming up. The bargains that used to be on HSN, and others, too…are long gone.

    • Monica Says:

      Your comment caught my attention because so few people are seeing the bad condition of the economy. And a bad recession is in the forecast.
      If these channels would take themselves back about 20 years, to when returns were easy, shipping was reasonable, and customer service was friendly and helpful, they might survive. Also, bring back quality products.
      Unfinished seams, thin scratchy fabrics, and unpredictable sizing are common in all the fashions. HSN is the worst. Jewelry is cheaply made and too expensive. Not all of it, but many of the house brands. Makeup and skincare arrive in broken containers, or are old…or even used! This almost never used to happen.
      The big wigs won’t change, so I agree, Dee….these channels aren’t here for too long.

  5. j Says:

    Meh, I have good/bad experiences buying from both. Need to get their hosts in order. Selling is not easy. However, some of the hosts that were kept have to be related/or kissing some body party to stay. Btw, Collen gets her own month? LOL! Bobbie Ray has been since 1983-and I seriously think she was lucky to get a show and maybe a hostess twinkie. I cannot wait to see Jane Screachy boot the other senior hosts out the door. Then see her strut and claim she has been there the longest, even though she got canned/quit for 2 years.

    • Lisa Says:

      I don’t watch much….what’s this about Colleen gets a month?!?! Is it because of her 25th anniversary?
      I agree about Bobbi. And, I like her quieter, calmer style better than Colleen. Colleen is ok but gets way too much airtime. And a whole month…..thanks for the warning!!

      • Dorie Says:

        I agree with you about Colleen overload on HSN. I like Colleen but HSN gives her way too much airtime, and she has too many of “her” designer products. And most of them are crap!
        They should let other hosts get more air time. Colleen is getting tiresome. They have made her the queen of HSN and it shows. Favoritism is not a nice thing.
        On the plus side she’s usually good with vendors. She does occasionally talk over them, and needs to calm down a bit. Also, please stop wearing clothes with no straps/shoulders. The look is so 5 years ago and so overdone. And she’s the worst offender.

    • Diane Says:

      I agree with your post, and others, who think there’s too much Colleen at HSN.
      Jane Treacy left on her own and I was really surprised QVC took her back. And lately, hosts and vendors have been shuffled around like playing cards.
      This economy is tough, and for shopping networks to survive, they need to take themselves back about 20 years, like Monica said.

      • Kate Says:

        HSN has definitely become “the Colleen Lopez shopping channel”. She really started working her way to queen after they axed Dan Dennis. Or maybe the timing was coincidence… anyway, she now has several shows, her own clothing and jewelry lines, and seems to get the “famous” vendors first. And it seems she is on air more than anyone.
        She has lost some of her polish…she interrupts guests sometimes, and exaggerates her emotions. “Ooooh, I HAVE to have the bracelet!!”. She gushes over everything more than ever.
        I like her as a person, but not so much anymore as a host. I think I’m just tired of her, TBH. All said, she’s one of the old guard, and should stay on; just a little less air time.
        They made a mistake letting Connie and Robin go; but it seems they’re on a mission to self destruct.

  6. Millie Says:

    They will continue to drop as long as these channels continue to operate and treat customers the way they do. Too many host lines of products (Colleen mainly as above mentioned) shoddily made and over priced. Most of the prices are jacked way up. Shipping takes too long and is too expensive. No more flex pays without deep credit checks. Customer service reps are rude and not knowledgeable. In general, the product quality has gotten much worse. Only Andrew Lessman keeps improving his supplements.
    A few good lines of jewelry, but they’re expensive. Skin care (Dimitri James “Skinn” line comes to mind) is way more on HSN and QVC. And other than Dimitri’s, much of it is just mediocre or less.
    There used to be good, affordable fashions and jewelry, innovative home and health products, many things which weren’t available elsewhere. Established products that were customer favorites. WHAT HAPPENED?
    Barry Diller left, then soon Mindy Grossman took over. THAT’S what happened. She tried to cheaply “elevate” HSN with designer seconds and junk. Stupid movie-themed shows. The price of everything went up. Good, long time vendors were left behind. Behold! A channel of expensive junk.
    Since the head honchos don’t want to change, these channels are doomed. I use HSN examples because I know them better, but it also applies to QVC. I don’t stop on TV anymore. It has changed for the worst.

  7. Brooke Says:

    Whether you’re a fan or not (and I do like her), you have to give Lisa Robertson credit for knowing when to leave QVC. True, she was trying to fulfill her dream of being self employed, but I think she sensed something in the air, and knew bad times were headed home shopping’s way.
    I’m not a drooling fan; I just like her style and gentle attitude. But for starting with 1 pair of earrings, she has built herself an empire. I have several pieces of her jewelry and it is fine quality. Her home decor is nice, too….well made. I don’t have a lot of it; Lisa’s taste is different than mine. I’m more of a modernist. But everything she sells is high quality. Some of her clothing is over priced for what it is; but still well made.
    I had to say this because her sense of timing was good in leaving QVC. It has gone downhill since, and now it’s dragging HSN along with it. What a shame, all these changes on all the home shopping channels.

    • Judy Says:

      I have been thinking the same thing. Lisa’s timing was good. She has a successful business now, and doesn’t have to worry about being part of the home shopping shuffle. She was smart, she built her business up little by little, and now it’s doing well.
      It’s really a shame about how the home shopping networks have changed. The economy is changing, and businesses have changed. Maybe home shopping’s time has come and gone, unfortunately.

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